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Scoular Co. Email Scam Case- How The Firm Got Swindled Out Of $17.2 Million
The emails appeared to come from Scoular Chief Executive Officer Chuck Elsea and the company’s auditing firm in Omaha, Nebraska. The fraud, which occurred in June, was investigated by the Federal Bureau of Investigation.
Scoular Co, a grain trading and handling company in the United States, was defrauded of more than $17 million through an international email scam. The deception was reported in the Omaha World-Herald newspaper. Scoular wired a total of $17.2 million to a bank in China through three wire transfers in June, according to the tabloid, acting on emails addressed to a Scoular executive.
The emails appeared to come from Scoular Chief Executive Officer Chuck Elsea and the company’s auditing firm in Omaha, Nebraska. The fraud, which occurred in June, was investigated by the Federal Bureau of Investigation. Impostors used email addresses set up in Germany, France, and Israel, as well as computer servers in Moscow, according to court documents. Scoular’s spokesman, who did not want to be identified, said the company might be able to recoup part of the funds. Even if no recovery occurs, the employee-owned company, which has annual revenues of around $6 billion, is expected to be able to bear the loss. Scoular, on the other hand, tightened its internal procedures and controls as a result of the incident.
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What Is An Email Scam?
Email fraud (or email scam) is the use of email to deceive another person for personal benefit or to harm another person. The email began to be used to scam individuals almost as soon as it became extensively used. Phishing emails account for 96% of all phishing attacks. Because of the rise in phishing attacks, email communication networks are now infected with malware. According to a Symantec study, one out of every 4,200 emails sent in 2020 will be a phishing email. Between October 2013 and this month, the frauds, often known as CEO email schemes, have targeted over 12,000 organizations around the world.
According to the Internet Crime Complaint Center, an FBI intelligence and investigative agency that records computer crimes, the transactions have netted thieves $2 billion. Large and small businesses in 108 countries have been harmed, and the threat is expanding, according to law enforcement officials. “It’s gone out of hand,” says Mitchell Thompson, a supervisory special agent and the director of the FBI’s New York office’s financial cybercrime task force. He claims that the thieves are “getting more brazen” by using third parties to carry out the scam, such as law firms and consultants. They’ve also gotten more clever in their approach to troll potential victims. “They make extensive use of social media against us.” They might send a spam email to see whether the executive is out of the office, which would make it a good time to target.
They might see on Facebook that [the chief executive] is traveling to Europe or Australia, so they know you’ll be in the air for a while” and have a window to strike, according to Mr Thompson.Change a letter or replace a company’s official email service with a Gmail account to impersonate the accounts of key executives. The phony account designed to imitate a KPMG lawyer utilized the suffix @kpmg-office.com, a convincing false address that could fool someone who isn’t paying attention. The crooks frequently impersonate the executive and direct the transfer, which they often do through a second account they covertly control, such as the KPMG lawyer’s account. The money is routed to accounts in Asia or Africa, where police have a tougher time recovering it. Authorities claim that by the time the corporation realizes it has been deceived, the money has already been spent.
Insights into Scoular Co.
Scoular, formerly The Scoular Company, is a company established in Omaha, Nebraska that specializes in grain, feed, and food ingredient buying, selling, storage, handling, and processing. George Scoular created the company in 1892, and it remained in the Scoular family’s hands until 1967 when it was purchased by Omaha industrialist Marshall Faith, who served as CEO for the following 23 years. Scoular had ten employees and three-grain elevators when Faith bought it, but it grew rapidly over the next several decades to become one of North America’s major grain storage and handling enterprises. Scoular was named 16th on FoodTalks’ list of the world’s top 40 plant protein companies in 2021.
Scoular employs about 1,000 individuals across 24 offices and 90 storage, handling, and processing facilities, the majority of which are located in the United States. Scoular claimed sales of $4.3 billion in 2017 and over one billion bushels exchanged. Keith McMurtry, an employee at Scouler Co in Omaha, Nebraska, received an email from his boss, CEO Chuck Elsea, in June 2014. Scoular was about to buy a Chinese startup, according to the email. McMurty was directed to contact a lawyer at accounting company KPMG by Elsea. The lawyer would assist in the transfer of monies and the closing of the transaction.
McMurty did as he was told, and soon he was sending $17.2 million to a Shanghai bank account in the name of “Dadi Co.” As you might expect, the CEO’s email was a forgery. Scammers utilized email impersonation to set up accounts in the names of both Elsea and the KPMG lawyer. What makes the Scoular fraud unique, aside from the massive $17.2 million loss? Take a look at this passage from “Elsea’s” email to McMurty: “We need the company to be funded properly and to show sufficient strength toward the Chinese. Keith, I will not forget your professionalism in this deal, and I will show you my appreciation very shortly.”It’s simple to see how an employee could be duped by a scheme like this, given the expressive language, praise, and promise of future benefits.
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How Scoular Co. Getting Swindled Out Of $17.2 Million
Events Leading Up To The Fraud
Keith McMurtry, the corporate controller of Scoular, a 124-year-old US grain trading and storage company, did not investigate his top executive’s request to wire $17.2 million to an offshore bank account. Scoular was in talks to buy a Chinese company, according to Chuck Elsea, who told Mr McMurtry in a top-secret email. The top executive directed him to communicate with a KPMG lawyer, who would send wire instructions to a Chinese account. “We need the company to be funded properly and to show sufficient strength toward the Chinese. Keith, I will not forget your professionalism in this deal, and I will show you my appreciation very shortly,” In June 2014, Mr Elsea wrote in an email. According to an affidavit sworn by a Federal Bureau of Investigation agent and filed in a Nebraska court, Mr McMurtry moved $17.2 million to a Shanghai Pudong Development Bank account in the name of Dadi Co during three transactions. It was a hoax email.
Mr Elsea was impersonated by criminals who set up a fake email account in his name. They also created fictitious email and phone accounts in the name of a real KPMG partner, who later claimed he had never heard of Scoular. The emails and phone numbers were linked to Germany, France, Israel, and Russia by US authorities. Scoular, which is placed 66th on Forbes’ list of the top private corporations in the United States with revenues of $5.9 billion, is one of the thousands of businesses that have become victims of business email compromise schemes, which have netted $800 million in the last six months. According to the FBI document, Mr McMurtry told the FBI that he was not suspicious of the transactions since Scoular was contemplating an expansion in China and he was working on an annual audit with KPMG. Mr McMurtry, who is no longer employed with Scoular, has not responded to demands for comment. Scoular, for his part, remained silent.
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How Scoular Co. Got Swindled Out By An Email Scam
The con started out innocently enough. Mr McMurtry got an email from Mr Elsea purporting to be from him. The phony email stated,“I have assigned you to manage file FT-809,” “This is a strictly confidential operation, which takes priority over other tasks. Have you already been contacted by Rodney Lawrence [the KPMG lawyer]?” It went on like this: “This is very sensitive, so please only communicate with me through this email, in order for us not to infringe SEC regulations.” The next day, “Mr Elsea” wrote another email, this time stressing that the transfer was urgent and that he should “proceed asap with the wire to the same beneficiary and bank account as yesterday”. The phony email account in Mr Elsea’s name was linked to Germany by FBI officials. The KPMG email address was linked to a Moscow server.
The phone number provided was found to be associated with an Israeli Skype account. Wells Fargo said Dadi – the name on the account in Shanghai where Mr. McMurtry wired the money — manufactured army boots, according to Scholars lawyers. According to the FBI affidavit, Dadi stated to the bank that the wire transactions were part of a sales contract for the manufacture of footwear. Scoular stated that it did not buy boots. Mr Lawrence is the global leader of KPMG’s international tax services, and his name was used in the email scheme. According to the affidavit, when questioned by the FBI, he stated that he was unfamiliar with Scoular and had not interacted with anyone at the company. The FBI secured a court order to collect cash kept at Shanghai Pudong Development Bank, but the account had been terminated and the funds had been transferred, according to the FBI.
What’s Next For Scoular Co
According to Austin Berglas, head of cyber investigations at K2 Intelligence and former chief of the FBI’s cyber section in New York, business email breach crimes are “a significant” concern. Executives are so reliant on the email that they don’t call to confirm transactions, and “there is no second check,” he adds.
Some of the email scams are similar, implying that they are being perpetrated by the same criminal gang. Several investigations have been launched by the FBI and the US Justice Department. The FBI has increased the number of intelligence analysts working on the case and has communicated with law enforcement authorities all across the world in the last year.
“We will open cases this year and we will make arrests this year,” says James Barnacle, chief of the FBI’s money laundering unit.
Actions To Take If You’re A Victim Of Email Scam
Using the internet to defraud people and steal money is nothing new. Users of dating services and fundraisers for catastrophes or terrorist attacks have been exploited by criminal organisations. Everyone from online publications to government authorities have been reporting about fraudulent Nigerian email scams and fake lottery winners for a decade now. Criminals employ a range of methods. They may hack into CEOs’ accounts using phishing emails to obtain access to their emails. Scoular, too, was a victim of a similar email hoax. In June, Scoular wired a total of $17.2 million to a bank in China via three wire transfers in response to emails made to a Scoular official. The email, unbeknownst to them, was sent by a scammer, not an executive.
It is very common nowadays to be a victim of an email scam. Don’t worry; the Chargebacking method comes into play here; it’s a fund recovery service that assists persons and organizations in recovering funds that have been stolen. They have properly trained people that are experienced in recovering money from bank fraudsters. Chargeback can assist you if you have been duped by a phishing email and have lost personal information, money, or any other asset as a result of an email scam. As soon as you contact us via our website’s online contact form, our investigation specialists will begin reviewing and working on your case. Following that, we’ll begin the first steps of evidence gathering and broker evaluation, and once evidence has been obtained, team members will begin filing your case documentation. The recovery stage is where we either confront the scammer ourselves or contact a third party, generally a financial or law enforcement body.
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